For The First Time Ever, The National Average Gas Price Is $5

GasBuddy reports the national average for gasoline at the pump has hit $5 per gallon, setting a new record in the U.S., as fuel inflation shows no signs of abating amid severe bottlenecks in refining and robust demand as peak driving season is underway. 

“BREAKING: According to GasBuddy, the national average has reached $5 per gallon,” Petroleum analysis expert at GasBuddy, Patrick De Haan tweeted Thursday morning. 

BREAKING: According to GasBuddy, the national average has reached $5 per gallon.

— Patrick De Haan ⛽️📊 (@GasBuddyGuy) June 9, 2022

And we all know who to blame for it…

Bear in mind though, that adjusted for inflation, today’s $5 gas price is still below the record high from 2008 of around $5.50…

We detailed this week how America’s pain at the pump is because U.S. refining capacity is structurally short and down 1 million barrels from April 2020 (a month after the lockdowns began) to 17.95 million bpd as of June. 

The worsening refining bottleneck, especially in the U.S., was explained by Mike Wirth, the CEO of oil giant Chevron, who recently told Bloomberg TV that there’s not enough refining capacity to meet the demand for gasoline and diesel because no new refinery will ever be built in the U.S. again. 

With no relief in sight, higher fuel prices at the pump have been devastating for Americans’ wage purchasing power — an hour of labor for the average American now buys less than 7 gallons of gasoline… the lowest since 2014 and just a third of its peak (at around 17 gallons) in April 2020. Note that with the current $31.95 average hourly earning rate, a $6 gas price (approximately $160 crude), filling up  your car would never have cost more in terms of labor.

Slowing economic growth and elevated inflation, a recipe for stagflation, have resulted in another plunge in President Biden’s polling numbers as his administration fails to tame energy inflation. 

Releasing one million bpd every day from the SPR has yet to arrest prices at the pump because of the bottleneck in refining. Meanwhile, Goldman Sachs has shifted crude oil targets from $125 to $140 a barrel. 

There are limited signs of demand destruction (at $120 a barrel): A four-week rolling average of implied gasoline demand rose, catching up to the five-year average for this time of year as Memorial Day travel accounts for higher consumption. 

And the Biden admin’s recent explanation that America should stop whining because it’s worse in Europe could be over soon as U.S. gas prices are rapidly catching up to U.K.’s petrol prices…

Higher prices will trigger demand destruction and be the primary rebalancing mechanism for oil markets, indicating pump prices on a national level still need to go higher.